Method and system for gift credit card

ABSTRACT

A method and system for providing purchasable value for gifts and other uses in the form of a credit instrument is provided. A purchaser of a gift credit instrument authorizes a credit institution with which the purchaser holds a credit account to create a limited-value, non-renewable secondary account linked exclusively to the purchaser&#39;s credit account. A credit instrument is issued to an authorized user which credit instrument uniquely identifies the secondary account. The gift credit instrument may be used in the same manner as the purchaser&#39;s credit instrument; however, it expires after a certain period of time or after the initial value of the secondary account is spent. A system for carrying out the method is also provided.

BACKGROUND OF THE INVENTION

This invention relates generally to systems and methods for performingcredit transactions. Specifically, this invention relates to a methodand system for providing purchasable value to a credit account holder,which value is in the form of a secondary account and credit instrumenthaving a limited value and useful at a plurality of retail institutionsor other locations where purchases may be made using credit.

It has been known for retail and other institutions to offercash-equivalent value in the form of paper gift certificates that anindividual may purchase. The purchased value is generally honored at anylocation of the offering institution. The individual purchasing suchcash-equivalent value (the purchaser) may elect to give the value toanother person (the recipient) or may keep it for later use. In thisway, a recipient of such value may effectively spend a limited amount ofthe purchaser's money on items of the recipient's choosing.

Commonly, paper gift certificates representing such cash-equivalentvalue are printed and offered for sale by individual retail institutionsor small localized collections of individual retail stores, e.g. theretail stores located in a particular shopping mall. These sponsoringinstitutions offer one or more locations generally in or around theirretail sales areas where paper gift certificates may be purchased. Apurchaser goes to one of these locations, and asks to purchase a certainvalue, for example $100.00. A clerk then prepares, generally by printingor hand-writing, one or more certificates representing the requestedvalue. The customer, in exchange for the cash-equivalent value of thecertificates, tenders cash, negotiable instruments, a credit instrumentor other method of payment in the amount of the purchased value plus anyrequired service charge.

The purchaser takes the paper certificates and keeps them in his or herpossession until such time as he or she may give them to recipient. Thepaper certificates may or may not be made out specifically in the nameof the recipient. The recipient then may, at his or her convenience, goto the sponsoring institution and redeem the certificates in full orpartial payment for goods or services, according to the rules forredemption established by the sponsoring institution. The sponsoringinstitution accepts the certificates, returning any overpayment to therecipient in cash, in the form of another paper gift certificate, or inanother form of value. The sponsoring institution keeps the redeemedgift certificates with received cash and negotiable instruments foraccounting and security purposes. Redeemed certificates may be kept forrelatively long periods by sponsoring institutions, also for accountingand security purposes.

There are, however, numerous disadvantages to purchasable value systemsusing paper gift certificates. Such programs are quite costly to thesponsoring institution. A paper gift certificate system ispaper-intensive, including the associated costs of paper and printing.Paper certificates, frequently in numerous denominations, must bepurchased or printed by the sponsoring institution and stored at retaillocations or other locations prior to being placed in circulation. Theymust also be stored at retail or other locations after redemption.Another major cost to the sponsoring institution is accounting. Papercertificates must be tracked prior to use and as they are placed intocirculation, frequently by hand-writing the serial numbers ofcertificates being placed into circulation into a log. After redemption,paper certificates must also be tracked and entered into the sponsoringinstitution's financial records. Another disadvantage to sponsoringinstitutions concerns security. Paper certificates can easily be lost,misplaced, or stolen from the sponsoring institution's locations.Further, as with any other paper document, especially those havingcash-equivalent value, a risk of counterfeiting exists.

There are also disadvantages from the point of view of the purchaser.Generally, a purchaser may purchase gift certificates only at particularlocations of sponsoring institutions. Purchasers must travel tosometimes inconvenient locations in order to purchase paper giftcertificates. Additionally, the purchaser must take sufficient cash orother value to purchase the paper gift certificate. A furtherdisadvantage is that the purchaser must choose a sponsoring institutionfrom which to purchase a gift certificate since gift certificates aregenerally not honored by institutions other than the sponsoringinstitution. Yet a further disadvantage is that the purchaser must carryone or more paper certificates, frequently in varying denominations,until he or she gives them to the recipient or elects to redeem them.The paper certificates are frequently fully negotiable, and thus thepurchaser has the exclusive burden of the risk of loss of papercertificates in his or her possession.

There are also disadvantages from the point of view of the recipient. Aswith sponsoring institutions and purchasers, the recipient bears theexclusive risk of losing paper certificates in his or her possession,and generally has no recourse for lost or stolen certificates. Papercertificates are frequently of a non-standard size and can therefore beinconvenient to carry in a wallet, handbag or other carrying device. Inredeeming paper certificates, the recipient is limited in his or herselection to the goods or services provided by the given sponsoringinstitution, reducing its value to the recipient. Further, thesponsoring institution may require a certain percentage of the value ofthe paper certificate to be used at the sponsoring institution, and maynot provide the recipient's change from a paper certificate transactionin cash.

There is, therefore, a need for a method and system of providingpurchasable value which does not suffer the cost, inconvenience, andsecurity disadvantages of paper certificates. Specifically, there is aneed for a method and system of providing purchasable value in the formof a widely-accepted credit card, authorized by a purchaser for alimited amount as a part of his or her credit account, and usable onlyby a named recipient until the authorized limit is reached or until theexpiration of a given time period.

SUMMARY OF THE INVENTION

The present invention provides a system and method for providingpurchasable value in the form of a credit instrument. A purchaserauthorizes an institution (hereafter the "sponsoring institution") withwhich he or she has a consumer credit account (hereafter, the "primaryaccount") to create a secondary account within or linked to the primaryaccount. The purchaser defines an expenditure limit (hereafter the"authorized value") and at least one authorized user for the secondaryaccount. The authorized value, and any service charge, may be chargedimmediately upon authorization to the primary account. Alternatively,the amounts of the transactions made by the authorized user in using thesecondary account may be posted to the purchaser's primary account assuch transactions are made.

After authorization by the purchaser, the sponsoring institution issuesa credit instrument (hereafter the "gift credit card") to the authorizeduser or users. The gift credit card is linked only to the secondaryaccount and may only be used to purchase goods or services up to thelimit of the secondary account, which was determined by theauthorization of the purchaser. The authorized user may use the giftcredit card at any retail or other location which honors creditinstruments issued by the sponsoring institution or a credit processingnetwork to which the sponsoring institution belongs.

The present system and method also includes a credit data storage andtransaction processing system known in the art. The credit data storageand transaction processing system includes computer memory means forstoring data of consumer credit accounts and computer means forprocessing credit transactions and adding or modifying data of consumercredit accounts stored in the computer memory means according to suchtransactions. Generally, the computer means receives data of a proposedtransaction, compares such data to data in the computer memory means ofthe primary account identified during the transaction, and based on thiscomparison, approves or denies the transaction. If the transaction isapproved, the computer means processes the transaction data to cause thecompletion of the transaction, the updating of the primary account datain the computer memory means, and the reporting of the transaction.

When used, the gift credit card is presented at a point of sale in offerof payment for goods and/or services (the "proposed transaction"). Dataof the proposed transaction is transmitted from the point of sale to thecomputer means, which compares the proposed transaction data to data inthe computer memory means concerning the secondary account, includingthe amount authorized for expenditure through the gift credit card. Ifthe comparison is favorable (i.e., the amount of the proposedtransaction is less than the secondary account's remaining authorizedamount), then the transaction is approved, and the computer means addsthe transacton data to or modifies the data of the secondary account inthe secondary computer means. If the proposed transaction exceeds theremaining amount authorized, the transaction is denied. In this way, thegift credit card may be used until the authorized value is used up.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a schematic showing the computer programming and dataprocessing for a preferred embodiment of the system and method of thepresent invention.

FIG. 2 is a schematic of the system and method which branches from FIG.1 which concerns the receipt and analysis of a purchaser'sauthorization.

FIG. 3 is a schematic of the system and method which branches from FIG.1, showing the creation of the secondary file according to thepurchaser's authorization.

FIG. 4 is a schematic of the system and method which branches from FIG.1, showing the use of a credit instrument configured to interact onlywith the secondary account in the credit transaction system.

FIG. 5A depicts the front of one embodiment of the credit instrument orgift credit card to be used in the system and method of the presentinvention.

FIG. 5B depicts the reverse of the embodiment of the credit instrumentshown in FIG. 5A.

FIG. 6 is a schematic of the credit transaction system of the presentinvention.

DESCRIPTION OF THE PREFERRED EMBODIMENT

For the purposes of promoting an understanding of the principles of theinvention, reference will now be made to the embodiment illustrated inthe drawings and specific language will be used to describe the same. Itwill nevertheless be understood that no limitation of the scope of theinvention is thereby intended, any alterations and further modificationin the described or illustrated system or method, and any furtherapplications of the principles of the invention as illustrated thereinbeing contemplated as would normally occur to one skilled in the art towhich the invention relates.

Referring generally to FIG. 1, the method and system of the presentinvention begins with functional block 20. In functional block 20, thepurchaser of a gift credit card according to the present inventionforwards an authorization for such gift credit card to a sponsoringinstitution with which he or she maintains a credit account. Theauthorization would generally include a submission of certain datarequired by the sponsoring institution. Such data may include thepurchaser's name, address, account number, security code or password,and/or any other data which the sponsoring institution may deemnecessary to ensure the accuracy and security of the authorization. Theauthorization also includes data of the authorized recipient of the giftcredit card, which may comprise the recipient's name, address, and/orother identifying information. Additionally, the authorization includesan identified value for the gift credit card.

The authorization may be transmitted by the purchaser in any of a numberof formats. In one embodiment, the purchaser may contact an authorizedrepresentative of the sponsoring institution and orally deliver theauthorization. In another embodiment, the purchaser may enter therequested data in a paper or electronic form which is presented,delivered, or transmitted to the sponsoring institution or itsauthorized representative. The authorization data is entered into thecredit data storage and transaction processing system, as depictedschematically in functional block 22.

As shown in functional block 24, after the authorization data is sent tothe sponsoring institution, the sponsoring institution examines theauthorization data to determine whether the authorization is sufficient,accurate and otherwise acceptable. One embodiment of this examinationprocess is schematically depicted in FIG. 2. In functional block 100,the computer means receives the authorization data. In functional block102, the computer means compares the authorization data of the purchaserto data of the purchaser and/or other data stored in a computer memorymeans. If the authorization data regarding the purchaser isunacceptable, the computer means discontinues the authorization process,as schematically depicted in functional block 104. In the same way, thecomputer means processes the authorization data regarding the recipientto determine whether such data is sufficient, accurate and otherwiseacceptable, by comparing the authorization data to data stored in acomputer memory means, as schematically depicted in functional block106. If such data is unacceptable, the computer means will discontinuethe authorization process, as schematically depicted in functional block104.

The computer means also processes the authorized value for the giftcredit card to determine whether it is within established parameters, asdepicted schematically in functional block 108. Such parameters mayinclude an absolute minimum or maximum of gift credit card value set bythe sponsoring institution, particular denominations set by thesponsoring institution, or a maximum determined by the amount ofavailable credit in the primary account. For example, it may be arequirement that gift credit cards have a value of at least $100.00 andin $5.00 increments, not to exceed the purchaser's available creditline. If the requested amount is determined to be outside the givenparameters, the CPU causes an error report to be generated and eithercauses a request to be issued for a new authorized amount ordiscontinues the authorization process. If the requested amount iswithin the given parameters, then the CPU issues an instructionauthorizing the creation of a secondary account. In the describedembodiment, the functions depicted in functional blocks 102, 106 and 108may be conducted in any order. Upon satisfactory completion of theauthorization steps, the computer means authorizes creation of asecondary account, as schematically depicted in functional block 110.

Referring again to FIG. 1, when the authorization process has beensatisfactorily completed, the authorized secondary account relatedexclusively to the primary account is created, as schematically depictedin functional block 26. One embodiment of the creation of the secondaryaccount is schematically depicted in FIG. 3. The creation of thesecondary account may take the form of defining or identifying asecondary computer memory means for storing data of the secondaryaccount, as schematically depicted in functional block 200. Thesecondary computer memory means, communicatively connected to thecomputer means, are initialized or otherwise prepared for storage ofdata of the secondary account, as depicted schematically in functionalblock 202. The authorized user data and the requested amount for thegift credit card are stored in the secondary computer memory means, asschematically depicted in functional block 204. In one embodiment, thesecondary computer memory means is a part of the computer memory meansin which the primary account data is stored. In a specific embodiment,the secondary account may be created by defining certain parts of thecomputer memory means allocated to the purchaser's account to be thesecondary computer memory means for use with the secondary account.

Referring again to FIG. 1, the primary account is charged the authorizedvalue of the secondary account. In one embodiment, the authorized valueis charged to the primary account at one time, after the secondaryaccount has been authorized, as schematically depicted in functionalblock 28. Alternatively, in another embodiment the authorized value maybe charged to the primary account as it is used by the authorized userof the secondary account.

After the creation of the secondary account, a credit instrument iscreated and issued to the authorized user defined in the secondaryaccount, as depicted schematically in functional block 30. Referring nowto FIGS. 5A and 5B, the credit instrument is shown in one embodiment.The credit instrument may be a credit card 400, such as those made ofplastic and having a magnetic data strip 402 thereon. Such cards mayinclude identifying data such as the authorized user's name 404, thename of the purchaser 406, and possibly the purchaser's account number408 and an expiration date 410. The authorized user's signature may alsobe placed on the back as known in the art. The trade name, trademark,logo, or other identification of the sponsoring institution (denoted by412 in FIG. 5A) and the credit system or network (e.g. Visa, Mastercard,Diner's Club, etc.; denoted by 414 in FIG. 5A) may also be placed on thecredit instrument.

The credit instrument ("gift credit card") should include anidentification of the instrument as linked to a specific secondaryaccount, and may identify the specific primary account to which thesecondary account is exclusively related. These identifications may bein the form of lettering, imprinting, magnetic storage, or other methodsof identification. Referring to FIG. 5A, in one embodiment the creditinstrument may have the primary account number 408 with an extra digit416 imprinted thereon or included in the magnetic data strip,identifying a secondary account related to the purchaser's primaryaccount. Alternatively, when the gift credit card is used, as describedbelow, additional data may be entered at the point of sale to identifyit with a secondary account related exclusively to the purchaser'sprimary account.

The issued gift credit card may be sent to the purchaser or directly tothe authorized user. Referring now to FIG. 4, after the gift credit cardis received by the authorized user, he or she may use the gift creditcard for purchases through the credit data storage and transactionprocessing system. In functional block 300, the recipient tenders thegift credit card at a point of sale in payment for goods or services toa seller which honors credit instruments issued by a certain sponsoringinstitution, system, or network. In functional block 302 the computermeans of the credit data storage and transaction processing systemdetermines whether to approve the transaction. The computer meanscompares data of the transaction from the point of sale to the data ofthe secondary account stored in the secondary computer means. If thecomparison is unfavorable (e.g. the transaction amount is larger thanthe initial value of the secondary account less the value of any priortransactions with the gift credit card, or is otherwise unacceptable),then the transaction is not approved by the computer means, and thetransaction is discontinued, as schematically depicted in functionalblock 304.

If the transaction is approved by the computer means, the computer meanscompletes the transaction, and modifies or adds to the data of thesecondary account in the secondary computer memory means to reflect theresult of the transaction, as schematically depicted in functional block306. For example, the amount of a purchase transaction may be subtractedfrom the initial value (or remaining value, if transactions have alreadybeen made) of the secondary account, and a new "remaining value" may bestored in the secondary computer means. The computer means thendetermines, based on the data stored in the secondary computer memorymeans, whether further uses of the gift credit card are permitted asdepicted in functional block 308. If so, then the computer means allowsthe secondary account to continue, as schematically depicted infunctional block 310. If, however, no further uses are permitted (i.e.the initial value of the secondary account has been used up), the creditdata storage and transaction processing system will terminate thesecondary account, as schematically depicted in functional block 314. Ontermination, the credit data storage and transaction processing systemwill automatically deny any further proposed transactions using the giftcredit card. The credit data storage and transaction processing systemcannot renew the value of the secondary account automatically. In oneembodiment, the secondary account may be reauthorized by the primaryaccount holder for another value. Alternatively, termination ends thesecondary account, and the purchaser cannot reauthorize it, although newsecondary account(s) may be available to the purchaser.

In one embodiment, the secondary account may also be terminated throughthe lapse of time. At the time the secondary account is created, anexpiration date (e.g. the date one year from the date of creation of thesecondary account) may be stored in the secondary computer memory means.The computer means may compare such expiration date with the currentdate, either as a periodic routine or as a part of the processing oftransactions. If the computer means determines that the current date islater than the expiration date, the secondary account is terminated.

Referring now to FIG. 6, the apparatus used to carry out the method andsystem of the present invention comprises a credit data storage andtransaction processing system known in the art, and may include acentral processing unit (CPU) 500 capable of processing the dataassociated with consumer credit accounts, a plurality of points of sale502 communicatively connected to the CPU, primary computer memory means504 communicatively connected to the CPU for storing data associatedwith consumer credit accounts, and data input means 506. In addition,the system of the present invention includes secondary computer memorymeans 508 communicatively connected to the CPU for storing dataassociated with authorized secondary or gift credit card accounts. Inone embodiment, the secondary computer memory means 508 comprises aspecific portion of that part of the primary computer memory means 504devoted to the primary account to which the secondary account isexclusively related.

In operation, data concerning the creation or authorization of thesecondary account is entered using data input means 506, processed byCPU 500, and stored in secondary computer memory means 508. When thegift credit card is used at one of the points of sale 502, data of thetransaction (which may comprise amount and date of the transaction andidentification information of the secondary account and the authorizeduser) is communicated to CPU 500, which compares such data with data ofthe particular secondary account associated with the gift credit cardfrom secondary computer memory means 508. CPU 500 may transmit messagesto the point of sale 502 concerning approval or denial of thetransaction or of the authorized amount in the secondary account. CPU500 also processes and completes approved transactions, storing new ormodified data in secondary computer memory means 508 associated with thesecondary account.

While the invention has been illustrated and described in detail in thedrawings and foregoing description, the same is to be considered asillustrative and not restrictive in character, it being understood thatonly the preferred embodiment has been shown and described and that allchanges and modifications that come within the spirit of the inventionare desired to be protected.

What is claimed is:
 1. In a credit transaction system, said credit transaction system including a plurality of points of sale and a credit data storage and transaction processing system communicatively connected to said points of sale, said credit data storage and transaction processing system comprising primary computer memory means for storing credit account data of a plurality of primary credit accounts, and computer means for processing said credit account data and transaction data communicated to said computer means from said points of sale, the improvement comprising:secondary computer memory means communicatively connected to said computer means for storing data of a secondary account, said secondary account having an initially-determined value and being exclusively related to one of said primary accounts such that said initially-determined value is charged to said one of said primary accounts; and a credit instrument for conducting transactions at one or more of said plurality of points of sale in said credit transaction system, wherein said credit instrument uniquely identifies said secondary account and data of said transactions are processed by said computer means and stored in said secondary computer memory means, and wherein said computer means terminates said secondary account when said credit instrument has been used for said transactions such that the value of said transactions equals said initially-determined value of said secondary account.
 2. In the system of claim 1, further improvements wherein said credit data storage and transaction processing system cannot automatically renew said initially-determined value of said secondary account.
 3. In the system of claim 1, further improvements wherein said secondary computer memory means comprises a portion of said primary computer memory means.
 4. In the system of claim 1, further improvements wherein said credit instrument includes data identifying said secondary account.
 5. In the system of claim 3, further improvements wherein said data identifying said secondary account are imprinted on the face of said credit instrument.
 6. In the system of claim 3, further improvements wherein said data identifying said secondary account are stored magnetically on said credit instrument.
 7. A method of creating and processing a secondary account linked to a primary credit account and having an initially-determined, nonrenewable limit, comprising the steps of:receiving authorization from a holder of a primary consumer credit account to create said secondary account; determining whether said authorization is accurate and sufficient; creating said secondary account where said authorization is determined to be accurate and sufficient; creating a credit instrument uniquely identifying said secondary account for use in credit transactions; charging the amount of said initially-determined limit to said primary account; allowing continued use of said credit instrument until said initially-determined limit is reached; and terminating said secondary account after said initially-determined limit is reached.
 8. The method of claim 7, wherein said step of creating a credit instrument includes imprinting data identifying said secondary credit account on the face of said credit instrument.
 9. The method of claim 7, wherein said step of creating a credit instrument includes magnetically placing data identifying said secondary credit account on said credit instrument.
 10. The method of claim 7 wherein said step of allowing continued use comprises the steps of:maintaining in a computer memory means a running total of transactions made with said credit instrument; adding to said total the amount of a proposed transaction to form a provisional total; comparing said provisional total to said initially-determined limit using a computer means; and approving said proposed transaction using said computer means if said provisional total is less than said initially-determined limit.
 11. The method of claim 7, wherein said charging step is accomplished by charging the entirety of said amount to said primary account occurs prior to the first use of said credit instrument.
 12. The method of claim 7, wherein said charging step is accomplished by charging said amount to said primary account in at least one installment, said at least one installment corresponding to at least one use of said credit instrument. 